Jio effect: Bharati Airtel sees 54% slump in Dec quarter profit

25 January 2017

Bharti Airtel, India's largest telecom operator, reported a 54 per cent decline in its December quarter profit to Rs504 crore, its lowest in four years, as competition from new entrant Reliance Jio hit its revenues. Airtel had posted a net profit of Rs1,108 crore for the corresponding period a year ago.

A brutal price war has erupted in India's mobile phone market since the entry of Reliance Jio Infocomm, owned by billionaire Mukesh Ambani, which has offered both free data and voice calls to win customers.

Airtel's consolidated revenues fell 3 per cent to Rs23,364 crore compared to Rs24,103 crore as it was forced to respond with price cuts to Jio's unlimited free voice and data services under a trial plan.

"The quarter has seen turbulence due to the continued predatory pricing by a new operator," Gopal Vittal, Bharti's managing director and chief executive for India and South Asia, said in a statement.

"This has led to an unprecedented year-on-year revenue decline for the industry, pressure on margins and a serious impact on the financial health of the sector."

Average revenue per user for Bharti's voice services in India fell nearly 7 per cent from the July-September period to Rs123, while its average revenue per user from data declined 13 per cent to Rs175.

Bharti also reported losses from its Africa operations of Rs620 crore, up from Rs487 crore in the same period last year, hit by the devaluation of the Nigerian currency, the company said.